UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                          -----------------------------

                                   FORM 10 - Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


         January 31, 1999                                    0-11088         
For the quarterly period ended                         Commission file number

                              ALFACELL CORPORATION
             (Exact name of registrant as specified in its charter)


          Delaware                                           22-2369085
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification No.)

               225 Belleville Avenue, Bloomfield, New Jersey 07003
               (Address of principal executive offices) (Zip Code)

(Registrant's telephone number, including area code)      (973) 748-8082


                                 NOT APPLICABLE
              (Former name, former address, and former fiscal year,
                         if changed since last report.)



     Indicate  by check mark  whether the  registrant  has (1) filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_  No ___

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

     Shares of Common Stock,  $.001 par value  outstanding as of March 12, 1999:
17,286,594


<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
                                 BALANCE SHEETS
                       January 31, 1999 and July 31, 1998

<TABLE>
<CAPTION>
                                                                                                   January 31,  
                                                                                                       1999             July 31,
                                                                                                   (Unaudited)            1998
                                                                                                   ------------        ------------
<S>                                                                                                <C>                 <C>         
                                     ASSETS
Current assets:
     Cash and cash equivalents                                                                     $  2,748,719        $  5,099,453
     Prepaid expenses                                                                                   150,378             117,187
                                                                                                   ------------        ------------
         Total current assets                                                                         2,899,097           5,216,640
                                                                                                   ------------        ------------
Property and equipment, net of accumulated depreciation and amortization
   of $894,240 at January 31, 1999 and $843,599 at July 31, 1998                                        249,397             300,038
                                                                                                   ------------        ------------
         Total assets                                                                              $  3,148,494        $  5,516,678
                                                                                                   ============        ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt                                                             $      8,822        $      9,175
     Accounts payable                                                                                   251,005             716,040
     Accrued expenses                                                                                   698,275           1,092,898
                                                                                                   ------------        ------------
         Total current liabilities                                                                      958,102           1,818,113
                                                                                                   ------------        ------------
Long-term debt, less current portion                                                                      2,604               6,727
                                                                                                   ------------        ------------
         Total liabilities                                                                              960,706           1,824,840
                                                                                                   ------------        ------------
Commitments and contingencies Stockholders' equity:
     Preferred stock, $.001 par value 
         Authorized and unissued, 1,000,000 shares at January 31, 1999
            and July 31, 1998                                                                              --                  --
     Common stock $.001 par value 
         Authorized  40,000,000 shares at January 31, 1999 and July 31, 1998;
         Issued and outstanding 17,280,594 shares at January 31, 1999
            and 17,239,893 shares at July 31, 1998                                                       17,281              17,240
     Capital in excess of par value                                                                  55,582,809          55,472,243
     Deficit accumulated during development stage                                                   (53,412,302)        (51,797,645)
                                                                                                   ------------        ------------
         Total stockholders' equity                                                                   2,187,788           3,691,838
                                                                                                   ------------        ------------
         Total liabilities and stockholders' equity                                                $  3,148,494        $  5,516,678
                                                                                                   ============        ============
</TABLE>

See accompanying notes to financial statements.


                                      - 2 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                            STATEMENTS OF OPERATIONS

                        Three months and six months ended
                         January 31, 1999 and 1998, and
                         the Period from August 24, 1981
                     (Date of Inception) to January 31, 1999

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                   August 24, 1981  
                                                     Three Months Ended                 Six Months Ended         (Date of Inception)
                                                         January 31,                       January 31,              to January 31,  
                                                    1999             1998              1999            1998              1999
                                                ------------     ------------     ------------     ------------      ------------
<S>                                             <C>              <C>              <C>              <C>               <C>      
REVENUE:
     Sales                                      $       --       $       --       $       --       $       --       $    553,489
     Investment income                                47,394           59,500          108,792          144,526        1,248,440
     Other income                                       --               --               --               --             60,103
                                                ------------     ------------     ------------     ------------     ------------
     TOTAL REVENUE                                    47,394           59,500          108,792          144,526        1,862,032
                                                ------------     ------------     ------------     ------------     ------------
COSTS AND EXPENSES:
     Cost of sales                                      --               --               --               --            336,495
     Research and development                        664,989        1,411,096        1,260,193        2,607,300       32,946,877
     General and administrative                      260,995          389,266          462,563          716,158       19,056,937
     Interest:                                                                                                 
         Related parties                                --               --               --               --          1,033,960
         Others                                          319              528              693           20,876        1,900,065
                                                ------------     ------------     ------------     ------------     ------------
       TOTAL COSTS AND EXPENSES                      926,303        1,800,890        1,723,449        3,344,334       55,274,334
                                                ------------     ------------     ------------     ------------     ------------
       NET LOSS                                 $   (878,909)    $ (1,741,390)    $ (1,614,657)    $ (3,199,808)    $(53,412,302)
                                                ============     ============     ============     ============     ============
     Loss per basic and diluted common                                                                         
            share                               $       (.05)    $       (.12)    $       (.09)    $       (.21)    $      (7.32)
                                                ============     ============     ============     ============     ============
Weighted average number of shares
     outstanding                                  17,260,356       15,043,921       17,256,238       14,882,968        7,296,671
                                                ============     ============     ============     ============     ============
</TABLE>


See accompanying notes to financial statements.


                                      - 3 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)



                            STATEMENTS OF CASH FLOWS

                        Six months ended January 31, 1999
                          and 1998, and the Period from
                                 August 24, 1981
                     (Date of Inception) to January 31, 1999

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                   August 24, 1981
                                                                                        Six Months Ended         (Date of Inception)
                                                                                           January 31,                     to
                                                                                     1999               1998        January 31, 1999
                                                                                 ------------       ------------  ------------------
<S>                                                                              <C>                <C>               <C>          
Cash flows from operating activities:
  Net Loss                                                                       $ (1,614,657)      $ (3,199,808)     $(53,412,302)
  Adjustments to reconcile net loss to
      net cash used in operating activities:
    Gain on sale of marketable securities                                                --                 --             (25,963)
    Depreciation and amortization                                                      50,641             48,146         1,273,505
    Loss on disposal of property and equipment                                           --                 --              18,926
    Noncash operating expenses                                                         94,741             98,820         5,259,160
    Amortization of deferred compensation                                                --                 --          11,442,000
    Amortization of organization costs                                                   --                 --               4,590
Changes in assets and liabilities:
    Increase in prepaid expenses                                                      (33,191)            (2,031)         (150,378)
    Decrease in other assets                                                             --                 --              36,184
    Increase in interest payable, related party                                          --                 --             744,539
    Increase (decrease) in accounts payable                                          (448,404)           556,551           444,901
    Increase in accrued payroll and expenses, related parties                            --                 --           2,348,145
    Increase (decrease) in accrued expenses                                          (394,623)          (152,941)        1,239,788
                                                                                 ------------       ------------      ------------
  Net cash used in operating activities                                            (2,345,493)        (2,651,263)      (30,776,905)
                                                                                 ------------       ------------      ------------
Cash flows from investing activities:
    Purchase of marketable equity securities                                             --                 --            (290,420)
    Proceeds from sale of marketable equity securities                                   --                 --             316,383
    Purchase of property and equipment                                                   --              (71,457)       (1,369,261)
    Patent costs                                                                         --                 --             (97,841)
                                                                                 ------------       ------------      ------------
     Net cash used in investing activities                                               --              (71,457)       (1,441,139)
                                                                                 ------------       ------------      ------------
</TABLE>


See accompanying notes to financial statements.                      (continued)


                                      - 4 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                       STATEMENTS OF CASH FLOWS, Continued

                        Six months ended January 31, 1999
                          and 1998, and the Period from
                                 August 24, 1981
                     (Date of Inception) to January 31, 1999

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                    August 24, 1981
                                                                                         Six Months Ended        (Date of Inception)
                                                                                            January 31,                   to
                                                                                      1999               1998       January 31, 1999
                                                                                  ------------       -----------    ----------------
<S>                                                                               <C>                <C>              <C>         
Cash flows from financing activities:
  Proceeds from short-term borrowings                                             $       --         $      --        $    849,500
  Payment of short-term borrowings                                                        --                --            (623,500)
  Increase in loans payable - related party, net                                          --                --           2,628,868
  Proceeds from bank debt and other long-term debt, net of
     deferred debt costs                                                                  --                --           2,410,883
  Reduction of bank debt and long-term debt                                             (4,476)       (1,377,152)       (2,914,029)
  Proceeds from common stock to be issued                                                 --             479,969           433,358
  Proceeds from issuance of common stock, net                                             (765)             --          26,374,010
  Proceeds from exercise of stock options and warrants, net                               --                --           5,460,673
  Proceeds from issuance of convertible debentures                                        --                --             347,000
                                                                                  ------------       -----------      ------------
     Net cash provided (used) by financing activities                                   (5,241)         (897,183)       34,966,763
                                                                                  ------------       -----------      ------------
     Net increase (decrease) in cash and cash equivalents                           (2,350,734)       (3,619,903)        2,748,719
Cash and cash equivalents at beginning of period                                     5,099,453         7,542,289              --
                                                                                  ------------       -----------      ------------
Cash and cash equivalents at end of period                                        $  2,748,719       $ 3,922,386      $  2,748,719
                                                                                  ============       ===========      ============
Supplemental disclosure of cash flow information -
   interest paid                                                                  $        693       $    20,876      $  1,647,048
                                                                                  ============       ===========      ============
Noncash financing activities:
   Issuance of convertible subordinated
     debenture for loan payable to officer                                        $       --         $      --        $  2,725,000
                                                                                  ============       ===========      ============
   Issuance of common stock upon the conversion of
     convertible subordinated debentures, related party                           $       --         $      --        $  2,945,000
                                                                                  ============       ===========      ============
   Conversion of short-term borrowings to common stock                            $       --         $      --        $    226,000
                                                                                  ============       ===========      ============
   Conversion of accrued interest, payroll and expenses by
     related parties to stock options                                             $       --         $      --        $  3,194,969
                                                                                  ============       ===========      ============
   Repurchase of stock options from related party                                 $       --         $      --        $   (198,417)
                                                                                  ============       ===========      ============
   Conversion of accrued interest to stock options                                $       --         $      --        $    142,441
                                                                                  ============       ===========      ============
   Conversion of accounts payable to common stock                                 $     16,631       $      --        $    193,896
                                                                                  ============       ===========      ============
   Conversion of notes payable, bank and accrued interest to
     long-term debt                                                               $       --         $      --        $  1,699,072
                                                                                  ============       ===========      ============
   Conversion of loans and interest payable, related party
     and accrued payroll and expenses, related parties to long-
     term accrued payroll and other, related party                                $       --         $      --        $  1,863,514
                                                                                  ============       ===========      ============
   Issuance of common stock upon the conversion of
      convertible subordinated debentures, other                                  $       --         $      --        $    127,000
                                                                                  ============       ===========      ============
</TABLE>

See accompanying notes to financial statements.


                                      - 5 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)


1.   ORGANIZATION AND BASIS OF PRESENTATION

     In  the  opinion  of  management,   the  accompanying  unaudited  financial
statements  contain all adjustments  (consisting of normal  recurring  accruals)
necessary to present fairly the Company's  financial  position as of January 31,
1999 and the results of  operations  for the three and six month  periods  ended
January  31,  1999  and  1998 and the  period  from  August  24,  1981  (date of
inception)  to January 31, 1999.  The results of  operations  for the six months
ended  January  31,  1999 are not  necessarily  indicative  of the results to be
expected for the full year.

     The  Company is a  development  stage  company as defined in the  Financial
Accounting  Standards Board's Statement of Financial Accounting Standards No. 7.
The Company is devoting substantially all of its present efforts to establishing
a new  business.  Its  planned  principal  operations  have not  commenced  and,
accordingly, no significant revenue has been derived therefrom.

     Effective  August 1, 1998,  the  Company  adopted  Statement  of  Financial
Accounting Standards No. 130 ("SFAS 130"), Reporting  Comprehensive Income. SFAS
130 establishes new rules for the reporting and display of comprehensive  income
and its components. The net loss of $1,615,000 and $3,200,000,  recorded for the
six  months  ended  January  31,  1999 and 1998,  respectively,  is equal to the
comprehensive loss for those periods.

     The Company has reported net losses since its inception.  Also, the Company
has limited liquid  resources.  These factors raise  substantial doubt about its
ability to continue as a going concern.  The financial statements do not include
any adjustments  relating to the  recoverability  and classification of reported
asset amounts or the amounts or classification of liabilities which might result
from the outcome of this uncertainty.

2.   EARNINGS PER COMMON SHARE

     Statement of Financial  Accounting Standards No. 128, "Earnings Per Share",
became effective for financial  statements for periods ending after December 15,
1997,  and  requires  presentation  of two  calculations  of earnings per common
share.  "Basic"  earnings per common share equals net income divided by weighted
average  common shares  outstanding  during the period.  "Diluted"  earnings per
common share equals net income divided by the sum of weighted

                                      - 6 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS, continued

                                   (Unaudited)


2.   EARNINGS PER COMMON SHARE, continued

average  common  shares   outstanding   during  the  period  plus  common  stock
equivalents.  The  Company's  Basic and Diluted  per share  amounts are the same
since the assumed exercise of stock options and warrants are all  anti-dilutive.
The amount of options and warrants  excluded from the  calculation was 6,083,679
and 4,358,208 at January 31, 1999 and 1998, respectively.

3.   CAPITAL STOCK

     In August  1998,  the Company  issued  5,000  three-year  stock  options as
payment for  services  rendered.  The  options  vested  immediately  and have an
exercise  price  of  $1.43  per  share.   The  Company   recorded   general  and
administrative  expense  of $4,200  which was based  upon the fair value of such
options on the date of issuance.

     In September  1998,  the Company  issued  13,717 shares of common stock for
payment of legal  services.  The fair value of the common stock in the amount of
$10,425 was charged to operations.

     On October 1, 1998 (the  "Effective  Date"),  the Company  entered  into an
agreement  with a  consultant  (the  "Agreement"),  resulting in the issuance of
200,000  five-year  stock  options with an exercise  price of $1.00 per share as
payment for services to be  rendered.  These  options  will vest as follows:  an
aggregate  of 20,000  shall vest on October 1, 1999 or upon signing of the first
corporate partnering deal, whichever shall occur first; an aggregate of 2,500 of
such  options  shall vest on the last day of each  month  over the first  twelve
months after the Effective Date of the Agreement;  the remaining 150,000 options
will  vest on the  third  anniversary  of the  Effective  Date of the  Agreement
provided  that the  consultant  is still  providing  consulting  services to the
Company under the Agreement at that time. The vesting of such remaining  options
shall be accelerated as follows:  50,000 of such options or the remainder of the
unvested  options,  whichever  is less,  shall  vest  upon the  signing  of each
corporate  partnering  deal in which the  total  consideration  provided  in the
Agreement is less than  $5,000,000;  100,000 of such options or the remainder of
the unvested  options,  whichever  is less,  shall vest upon the signing of each
corporate  partnering  deal in which the  total  consideration  provided  in the
Agreement is greater than $5,000,000 but less than


                                      - 7 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS, continued

                                   (Unaudited)


3.   CAPITAL STOCK, continued

$10,000,000;  200,000 of such options or the remainder of the unvested  options,
whichever is less, shall vest upon the signing of each corporate partnering deal
in which the total  consideration  provided  in the  Agreement  is greater  than
$10,000,000. Should the Company sell a controlling interest in its assets and/or
equity at any time after the signature of the Agreement,  all options will vest.
The Company has  recorded  approximately  $18,900 of general and  administrative
expense  based upon the fair value of the vested  options  through  January  31,
1999.  Additional expense will be recorded in subsequent periods through October
1, 2001 as the remainder of the options vest.

     In January  1999,  the Company  issued  26,984  shares of common  stock for
payment of legal  services.  The fair value of the common stock in the amount of
$6,206 was charged to operations.

     The  Company  has  received  notification  from  The  Nasdaq  Stock  Market
("Nasdaq")  that the Company is not  presently  in  compliance  with the minimum
$1.00 bid price  requirement.  On March 11, 1999, the Company  participated in a
hearing  by Nasdaq  on this  matter in which  the  Company  submitted  a plan of
compliance  requesting that Nasdaq consider many factors affecting the Company's
business.  The Company  requested  that Nasdaq  grant an  extension  of time for
Alfacell to comply with this and other Nasdaq SmallCap maintenance requirements.
The  Company's  common stock will  continue to be listed on the Nasdaq  SmallCap
Market  pending the outcome of the hearing.  Should  Nasdaq decide to delete the
Company's  securities,  the Company will not be notified of this decision  until
after the securities  have been removed from the Nasdaq SmallCap  Market.  There
can be no  assurance  that the outcome of the hearing  will be  favorable to the
Company.  Delisting  of the  Company's  common  stock from the  Nasdaq  SmallCap
Market,  could have a  material  adverse  effect on the  Company  including  its
ability to raise  additional  capital,  stockholder  liquidity  and price of the
Company's common stock.


                                      - 8 -

<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

     Information  contained herein contains  "forward-looking  statements" which
can be identified by the use of forward-looking  terminology such as "believes",
"expects",  "may", "will", "should", or "anticipates" or the negative thereof or
other  variations  thereon  or  comparable  terminology,  or by  discussions  of
strategy.  No  assurance  can be given  that the future  results  covered by the
forward-looking  statements  will be achieved.  The matters set forth in Exhibit
99.1 to the Company's  Annual Report on Form 10-K for the fiscal year ended July
31, 1998,  which is  incorporated  herein by  reference,  constitute  cautionary
statements  identifying  important factors with respect to such  forward-looking
statements,  including certain risks and uncertainties,  that could cause actual
results  to  vary  materially   from  the  future  results   indicated  in  such
forward-looking  statements.  Other factors  could also cause actual  results to
vary  materially  from the  future  results  indicated  in such  forward-looking
statements.

Results of Operations

Three and six month periods ended January 31, 1999 and 1998

     Revenues.  The  Company is a  development  stage  company as defined in the
Financial   Accounting  Standards  Board's  Statement  of  Financial  Accounting
Standards  No. 7. As such,  the  Company is  devoting  substantially  all of its
present efforts to establishing a new business and developing new drug products.
The Company's planned principal  operations of marketing and/or licensing of new
drugs have not  commenced  and,  accordingly,  no  significant  revenue has been
derived  therefrom.  The Company  focuses most of its  productive  and financial
resources  on the  development  of ONCONASE and as such has not had any sales in
the six months ended  January 31, 1999 and 1998.  Investment  income for the six
months  ended  January 31, 1999 was  $109,000  compared to $145,000 for the same
period last year, a decrease of $36,000. This decrease was due to lower balances
of cash and cash equivalents.

     Research and  Development.  Research and development  expense for the three
months ended January 31, 1999 was $665,000  compared to $1,411,000  for the same
period last year, a decrease of $746,000 or 53%. This decrease was primarily due
to a 94% decrease in costs associated with the purchase of raw materials and the
manufacture  of clinical  supplies of  ONCONASE,  and a 31% decrease in costs in
support  of  on-going  clinical  trials  and an 84%  decrease  in  expenses  for
preparation  of an NDA for  ONCONASE,  both  primarily due to the closing of the
Phase III clinical trials for pancreatic cancer.

     Research and development  expense for the six months ended January 31, 1999
was $1,260,000  compared to $2,607,000 for the same period last year, a decrease
of $1,347,000 or 52%. This decrease was primarily due to a 95% decrease in costs
related  to the  purchase  of raw  materials  and the  manufacture  of  clinical
supplies  of  ONCONASE,  and a 43%  decrease  in costs in  support  of  on-going
clinical  trials and a 69%  decrease in expenses for  preparation  of an NDA for
ONCONASE, both primarily due to the closing of the Phase III clinical trials for
pancreatic cancer.

                                      - 9 -

<PAGE>


     General  and  Administrative.  General and  administrative  expense for the
three  months ended  January 31, 1999 was $261,000  compared to $389,000 for the
same  period  last year,  a decrease  of  $128,000  or 33%.  This  decrease  was
primarily due to a 96% decrease in legal fees, a 25% reduction in administrative
personnel  costs and a 43% decrease in public  relations  expenses,  offset by a
$34,000  increase  in non-cash  expense  relating  to stock  options  issued for
consulting services.

     General and  administrative  expense for the six months  ended  January 31,
1999 was $463,000 compared to $716,000 for the same period last year, a decrease
of $253,000 or 35%.  This  decrease was primarily due to a 93% decrease in legal
fees, a 32% reduction in  administrative  personnel  costs and a 40% decrease in
public  relations  expenses,  offset by a $43,000  increase in non-cash  expense
relating to stock options issued for consulting services.

     Interest.  Interest expense for the three months ended January 31, 1999 was
$300  compared to $500 for the same period last year, a decrease of $200 or 40%.
Interest  expense for the six months ended January 31, 1999 was $700 compared to
$20,900  for the same  period  last year,  a decrease  of $20,200 or 97%.  These
decreases  were primarily due to the payment of the entire  principal  amount of
the Company's $1.4 million term loan during the fiscal year ended July 31, 1998.

     Net Loss.  The Company has incurred  net losses  during each year since its
inception. The net loss for the three months ended January 31, 1999 was $879,000
as compared to $1,741,000  for the same period last year, a decrease of $862,000
or 50%. The net loss for the six months ended January 31, 1999 was $1,615,000 as
compared to  $3,200,000  for the same period last year, a decrease of $1,585,000
or 50%.  The  cumulative  loss from the date of  inception,  August 24,  1981 to
January 31, 1999,  amounted to $53,412,000.  Such losses are attributable to the
fact that the Company is still in the development  stage and accordingly has not
derived  sufficient  revenues from  operations to offset the  development  stage
expenses.

Year 2000

     The Company is in the process of reviewing its business systems,  including
its computer systems and computer controlled equipment, and is in the process of
querying  its  suppliers  and vendors as to their  progress in  identifying  and
addressing  problems that their systems may face in correctly  interpreting  and
processing date information as the Year 2000 approaches and is reached. Based on
this review, the Company has implemented a plan to achieve Year 2000 compliance.
While there may be other  areas that may affect the  Company's  operations  upon
commercialization  of the Company's products under development,  the Company has
identified  three  major areas where Year 2000  compliance  is critical  for the
normal functioning of the Company's  business:  Business and Accounting Computer
Systems, Clinical Data Management Systems and Product Manufacturing Systems.


                                     - 10 -

<PAGE>




Business and Accounting Computer Systems 

     The  Company  utilizes  standard,  widely-available  software  packages  to
perform its word  processing,  spreadsheet  and accounting  duties.  Preliminary
inquiries  have  revealed  that  software  upgrades  are or will be available to
ensure Year 2000  compliance.  The Company  expects to upgrade its  Business and
Accounting  Computer  Systems by the third  quarter of 1999.  While  there is no
assurance  at this time  that such  upgrades  will be Year 2000  compliant,  the
Company does not believe that non-compliance would have a material effect on the
Company's business.  Since the risks of non-compliance are minimal,  the Company
does not plan to create a contingency plan for these systems at this time.

Clinical Data Management Systems

     The Company utilizes the services of an outside vendor to handle all of its
data  management  needs with regard to collection  and reporting of its clinical
trial data. Two major software  systems are utilized to process the data, one of
which has been  validated and is Year 2000  compliant.  The other system,  which
handles  collection of the Company's ongoing clinical trial data, is expected to
be Year 2000 compliant with some minor  modifications.  The vendor believes that
these  modifications  deal only with display and not storage of the dates. While
it appears that the computer systems utilized to process the Company's  clinical
trial  data is or  will be Year  2000  compliant,  non-compliance  could  have a
material impact on the Company's  ability to process the data in a timely manner
for submission to the FDA, if necessary.  Since the likelihood of non-compliance
is minimal,  the Company  does not plan to create a  contingency  plan for these
systems at this time.

Product Manufacturing Systems

     The Company  utilizes  the  services of outside  suppliers  to  manufacture
ONCONASE and perform many of the  FDA-required  related testing of such product.
The  Company  has sent  written  requests  to such  suppliers  in an  effort  to
determine the status of Year 2000 compliance. Responses are expected through the
second calendar quarter of 1999. The Company will develop  contingency plans, if
necessary,  during the first half of 1999 in response to assessments of the Year
2000 readiness of these suppliers.

Year 2000 Summary

     The  Company has  determined  that Year 2000  compliance  should not have a
material  adverse  effect on the  Company,  including  the  Company's  financial
condition, results of operations or cash flow. The Company estimates the cost of
its Year 2000 efforts to be  approximately  $50,000.  The total cost estimate is
based on management's current assessment and is subject to change.


                                     - 11 -

<PAGE>



     The Company may encounter  problems with vendors and suppliers  which could
adversely  affect the Company's  financial  condition,  results of operations or
cash flow. The Company cannot  accurately  predict the occurrence and or outcome
of any  such  problems,  nor can the  cost of such  problems  be  estimated.  In
addition,  there  can be no  assurance  that the  failure  to  ensure  Year 2000
compliance by a third party would not have a material effect on the Company.

Liquidity and Capital Resources

     Alfacell has financed its  operations  since  inception  primarily  through
equity and debt financing,  research product sales and interest  income.  During
the six months ended  January 31,  1999,  the Company had a net decrease in cash
and cash equivalents of $2,350,000,  which resulted primarily from net cash used
in operating  activities of  $2,345,000.  Total cash resources as of January 31,
1999 were $2,749,000 compared to $5,099,000 at July 31, 1998.

     The  Company's  current  liabilities  as of January 31, 1999 were  $958,000
compared to  $1,818,000  at July 31, 1998, a decrease of $860,000.  The decrease
was  primarily  due to  decreases in costs  associated  with the purchase of raw
materials  and the  manufacture  of ONCONASE,  a decrease in costs in support of
on-going clinical trials, primarily due to the closing of the Phase III clinical
trials for pancreatic cancer, and decreased legal fees.

     The  Company  has  recurring  losses and limited  liquid  resources.  These
factors  raise  substantial  doubt  about its  ability  to  continue  as a going
concern. The financial statements do not include any adjustments relating to the
recoverability  and  classification  of reported asset amounts or the amounts or
classification  of  liabilities  which  might  result  from the  outcome of this
uncertainty.

     Until the Company's operations generate significant revenues, cash reserves
will  continue  to fund  operations.  To  date,  a  significant  portion  of the
Company's  financing  has been through  private  placements  of common stock and
warrants,  the issuance of common stock for stock options exercised and services
rendered, debt financing and financing provided by the Company's Chief Executive
Officer.  Based upon reduced  spending  levels as described  below,  the Company
believes  that its cash and cash  equivalents  as of  January  31,  1999 will be
sufficient  to meet its  anticipated  cash needs  through the fiscal year ending
July 31, 1999. However,  there can be no assurance that the Company will be able
to successfully implement the reduced spending measures.

     The Company has taken steps,  and is currently  taking  additional steps to
significantly  reduce the amount of cash used to fund ongoing operations.  These
steps include  postponement of certain  clinical and regulatory costs associated
with  preparation  of an NDA for  ONCONASE,  closing  its Phase III  program for
advanced pancreatic cancer and postponement of company-sponsored clinical trials
for ONCONASE in indications other than unresectable malignant mesothelioma.  The
Company's  continued  operations will depend on its ability to raise  additional
funds through various sources,  including collaborative  agreements or strategic
alliances.  However,  there can be no assurance that such additional  funds will
become available. The

                                     - 12 -

<PAGE>



Company does not anticipate it will be able to raise  additional  capital in the
equity  markets in the near future  because of the  termination of its Phase III
clinical trials for pancreatic cancer.  Over the longer term, the ability of the
Company to raise  additional  capital  through the sale of its  securities  will
primarily  be  dependent  on the  outcome  of the Phase III  clinical  trial for
unresectable  malignant  mesothelioma.  However, the ability to raise funding at
that time may be  dependent  upon other  factors  including  without  limitation
market  conditions,  and  there can be no  assurance  that  such  funds  will be
available.  Preliminary  survival results of the Phase III trial are expected in
the third calendar quarter of 1999. The Company is currently  exploring  various
strategic alternatives for its business and research and development operations.

     The  Company  has  received  notification  from  The  Nasdaq  Stock  Market
("Nasdaq")  that the Company is not  presently  in  compliance  with the minimum
$1.00 bid price  requirement.  On March 11, 1999, the Company  participated in a
hearing  by Nasdaq  on this  matter in which  the  Company  submitted  a plan of
compliance  requesting that Nasdaq consider many factors affecting the Company's
business.  The Company  requested  that Nasdaq  grant an  extension  of time for
Alfacell to comply with this and other Nasdaq SmallCap maintenance requirements.
The  Company's  common stock will  continue to be listed on the Nasdaq  SmallCap
Market  pending the outcome of the hearing.  Should  Nasdaq decide to delete the
Company's  securities,  the Company will not be notified of this decision  until
after the securities  have been removed from the Nasdaq SmallCap  Market.  There
can be no  assurance  that the outcome of the hearing  will be  favorable to the
Company.  Delisting  of the  Company's  common  stock from the  Nasdaq  SmallCap
Market,  could have a  material  adverse  effect on the  Company  including  its
ability to raise  additional  capital,  stockholder  liquidity  and price of the
Company's common stock.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        Not applicable.

PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

     (a) An annual meeting of stockholders was held on January 21, 1999.

     (b) The directors  elected at the annual meeting were Kuslima Shogen,  Gail
E. Fraser,  Stanislaw  M.  Mikulski,  Stephen K.  Carter,  Donald R. Conklin and
Martin F. Stadler.

     (c) The  matters  voted upon at the annual  meeting  and the results of the
voting  are  set  forth  below.  All  of  such  matters  were  approved  by  the
stockholders.

          (i) The  stockholders  voted  13,753,753  shares in favor and withheld
     266,823  shares  with  respect  to the  election  of  Kuslima  Shogen  as a
     director;  13,751,313  shares in favor and  withheld  267,263  shares  with
     respect to the election of Gail E. Fraser, as a director; 13,756,453

                                     - 13 -

<PAGE>



     shares in favor and withheld 264,123 shares with respect to the election of
     Stanislaw  M.  Mikulski  as a  director;  13,820,083  shares  in favor  and
     withheld  198,493  shares with respect to the election of Stephen K. Carter
     as a director;  13,822,993 shares in favor and withheld 195,583 shares with
     respect to the election of Donald R. Conklin as a director;  and 13,822,033
     shares in favor and withheld 196,543 shares with respect to the election of
     Martin F. Stadler as a director;

          (ii) The  stockholders  voted  13,875,329  shares in favor and  54,113
     shares  against  a  proposal  to  select  KPMG LLP to audit  the  Company's
     financial  statements  for the fiscal  year ending  July 31,  1999.  89,134
     shares abstained from voting on this proposal.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K).


                                                               Exhibit No. or
      Exhibit                                                   Incorporation
        No.              Item Title                             by Reference
      -------            ----------                             ------------
        3.1     Certificate of Incorporation                           *

        3.2     By-Laws                                                *

        3.3     Amendment to Certificate of Incorporation              #

        3.4     Amendment to Certificate of Incorporation            +++

        4.1     Form of Convertible Debenture                         **

        10.1    Form   of   Stock   and   Warrant   Purchase
                Agreements   used  in   private   placements
                completed April 1996 and June 1996                    ##

        10.2    Lease  Agreement  - 225  Belleville  Avenue,
                Bloomfield, New Jersey                               ###

        10.3    Form  of  Stock   Purchase   Agreement   and
                Certificate  used in connection with various
                private placements                                   ***

        10.4    Form of Stock and Warrant Purchase Agreement
                and  Warrant   Agreement   used  in  Private
                Placement completed on March 21, 1994                ***

        10.5    The  Company's  1993 Stock  Option  Plan and
                Form of Option Agreement                           *****

        10.6    Debt  Conversion  Agreement  dated March 30,
                1994 with Kuslima Shogen                            ****

        10.7    Accrued Salary  Conversion  Agreement  dated
                March 30, 1994 with Kuslima Shogen                  ****

        10.8    Accrued Salary  Conversion  Agreement  dated
                March 30, 1994 with Stanislaw Mikulski              ****

        10.9    Debt  Conversion  Agreement  dated March 30,
                1994 with John Schierloh                            ****
                            

                           - 14 -

<PAGE>



                                                               Exhibit No. or
      Exhibit                                                   Incorporation
        No.              Item Title                             by Reference
      -------            ----------                             ------------

        10.10   Option  Agreement  dated March 30, 1994 with
                Kuslima  Shogen **** 10.11 Option  Agreement
                dated March 30, 1994 with Kuslima Shogen            ****

        10.12   Amendment  No.  1  dated  June  20,  1994 to
                Option  Agreement  dated March 30, 1994 with
                Kuslima Shogen                                      ****

        10.13   Form of Amendment  No. 1 dated June 20, 1994
                to Option  Agreement  dated  March 30,  1994
                with Kuslima Shogen                                *****

        10.14   Form of Amendment  No. 1 dated June 20, 1994
                to Option  Agreement  dated  March 30,  1994
                with Stanislaw Mikulski                            *****


        10.15   Form of Stock and Warrant Purchase Agreement
                and  Warrant   Agreement   used  in  Private
                Placement completed on September 13, 1994              +
                       

        10.16   Form of Subscription  Agreements and Warrant
                Agreement used in Private  Placements closed
                in October 1994 and September 1995                     #
                      

        10.17   1997 Stock Option Plan                               ###
                     

        10.18   Separation  Agreement  with  Michael C. Lowe
                dated as of October 9, 1997                           ++

        10.19   Form of  Subscription  Agreement and Warrant
                Agreement   used   in   Private    Placement
                completed on February 20, 1998                       +++

        10.20   Form  of  Warrant  Agreement  issued  to the
                Placement   Agent  in  connection  with  the
                Private Placement  completed on February 20,
                1998                                                 +++

        10.21   Placement Agent Agreement dated December 15,
                1997                                                 +++
                      
        27.1    Financial Data Schedule                            #####
                      
        99.1    Factors  to  Consider  in  Connection   with
                Forward-Looking  Statements                         ####


*       Previously filed as exhibit to the Company's  Registration  Statement on
        Form S-18 (File No.  2-79975-NY)  and  incorporated  herein by reference
        thereto.

**      Previously filed as exhibits to the Company's Annual Report on Form 10-K
        for the year ended July 31, 1993 and  incorporated  herein by  reference
        thereto.

***     Previously  filed as exhibits to the Company's  Quarterly Report on Form
        10-QSB for the quarter ended January 31, 1994 and incorporated herein by
        reference thereto.

****    Previously  filed as exhibits to the Company's  Quarterly Report on Form
        10-QSB for the quarter ended April 30, 1994 and  incorporated  herein by
        reference thereto.

                                     - 15 -

<PAGE>



*****   Previously  filed as exhibits to the  Company's  Registration  Statement
        Form SB-2  (File No.  33-76950)  and  incorporated  herein by  reference
        thereto.

+       Previously filed as exhibits to the Company's  Registration Statement on
        Form SB-2  (File No.  33-83072)  and  incorporated  herein by  reference
        thereto.

++      Previously  filed as exhibits to the Company's  Quarterly Report on Form
        10-Q for the quarter ended October 31, 1997 and  incorporated  herein by
        reference thereto.

+++     Previously  filed as exhibits to the Company's  Quarterly Report on Form
        10-Q for the quarter ended January 31, 1998 and  incorporated  herein by
        reference thereto.

#       Previously  filed as exhibits  to the  Company's  Annual  Report on Form
        10-KSB  for the year  ended  July 31,  1995 and  incorporated  herein by
        reference thereto.

##      Previously filed as exhibits to the Company's  Registration Statement on
        Form SB-2 (File No.  333-11575)  and  incorporated  herein by  reference
        thereto.

###     Previously  filed as exhibits to the Company's  Quarterly Report on Form
        10-QSB for the quarter ended April 30, 1997 and  incorporated  herein by
        reference thereto.

####    Previously filed as exhibits to the Company's Annual Report on Form 10-K
        for the year ended July 31, 1998 and  incorporated  herein by  reference
        thereto.

#####   Filed herewith.

(b)     Reports on Form 8-K.

        None.

                                     - 16 -

<PAGE>



                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                          ALFACELL CORPORATION   
                                               (Registrant)


March 16, 1999                             /s/ GAIL E. FRASER       
                                          -----------------------------------
                                           Gail E. Fraser
                                           Vice President, Finance and
                                           Chief Financial Officer (Principal
                                           Accounting Officer and Principal
                                           Financial Officer)





                                     - 17 -